Updated 5/4/2021
The CARES Act enabled various relief programs for business and exempt entities. While some of the provisions for not-for-profits were limited to 501(c)(3) charitable organizations, there are several provisions labor unions can take advantage of. Below we dive into the benefits available for labor unions.
Paycheck Protection Program (PPP) Loans
Under the American Rescue Plan Act (ARPA), labor unions are now eligible to apply for PPP loans. These loans are administered by banks and have forgiveness features if the loan is spent on qualified expenses. Visit the SBA’s website for more information on how to apply for a PPP loan.
Economic Injury Disaster Loan (EIDL) Program
Unlike the PPP loans, the EIDL program is open to all types of exempt organizations, including labor organizations. This loan program is based on the architecture of the SBA’s existing 7(a) loan program and will make forgivable loans of up to $10 million available to qualifying organizations. It’s important to note that organizations that qualify and accept the EIDL funds through the SBA would not be able to receive the PPP loan for the same purpose.
Employee Retention Credit Program
The employee retention tax credit is also available to labor organizations, and is most beneficial to those with fewer than 100 employees, as the credit is reduced after 100 employees. Qualified employers are allowed a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee. This credit is administered by the union’s payroll processing, and the credit is taken on future payroll tax filing.
Updated 9/15/2023: Due to the IRS ERTC moratorium, Anders will no longer be accepting new ERTC clients until the IRS issues additional guidance related to this moratorium and the options available to affected businesses. Learn more about the IRS’s ERTC moratorium.
Employer Payroll Tax Deferment Program
The CARES Act allows employers to defer deposits and payments of the employer’s portion of social security taxes. All businesses, including labor organizations, can defer 50% of employer’s share of FICA payroll taxes until December 31, 2020. It’s important to note that employers that received a PPP loan may not defer the deposit and payment of the employer’s share of social security tax that is otherwise due after the employer receives a decision from the lender that the loan was forgiven. Employers who have received a PPP loan that has not yet been forgiven are still eligible for the deferral.
Tax Credits for Paid Sick and Paid Family Medical Leave
Generally, employers who employ between 50 and 500 employees are required to pay emergency family and medical leave. The required paid sick leave is up to 80 hours for full-time employees and expanded medical leave requires payment for 12 weeks, allowing the first 2 weeks to be unpaid. There is the capability to take a credit against payroll taxes being paid for amounts paid under the extended sick leave or family medical leave program.
Protection From Future Actions Against Unions
Under section 4003 (c)(3)(D)(i)(VIII)&(IX) of the CARES Act, any company that received a PPP loan:
- Will not outsource or offshore jobs for the term of the loan and 2 years after completing repayment of the loan.
- Will not abrogate existing collective bargaining agreements for the term of the loan and 2 years after completing repayment of the loan.
- Must remain neutral in any union organizing effort for the term of the loan.
Our advisors are closely following COVID-19 relief efforts and will continue to publish insights to keep you informed about potential impacts and benefits. Visit our COVID-19 Resource Center for more insights or contact an Anders advisor below to learn more about eligible relief programs.
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